Tag: debt

The White House Claims Borrowing $16 Trillion Over the Next Decade Is Fiscally Responsible

The budget plan President Joe Biden unveiled on Monday would hike taxes, increase federal spending to unprecedented levels, and lock in budget deficits that average nearly $2 trillion annually for the next decade.

But possibly the craziest detail is the fact that the White House is trying to frame all of that as being an exercise in fiscal restraint.

No, really. In a “fact sheet” released alongside the budget, the White House touted how the proposal would cut the deficit by $3 trillion over the next 10 years. “Strong and shared growth that benefits all Americans isn’t just good for working families and the economy; it will also lead to better fiscal outcomes,” the administration claims, adding that Biden believes “long-term investments in our nation and its people should be paid for.”

Someone in the White House might want to Google what the phrase “paid for” actually means, because Biden’s budget assumes the federal government will keep borrowing at near-record levels for the next decade.

For fiscal year 2025, which begins on October 1 of this year, Biden is asking Congress to spend $7.3 trillion while the federal government will collect just $5.5 trillion in taxes. That will necessitate borrowing $1.8 trillion to make ends meet. Over the 10-year window covered by the president’s budget plan, federal revenues would exceed $70 trillion, but Biden is proposing to spend $86.6 trillion.

This is what “paid for” looks like, apparently.

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The U.S. national debt is rising by $1 trillion about every 100 days

The debt load of the U.S. is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.

The nation’s debt permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months.

U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 billion, as of Wednesday. Bank of America investment strategist Michael Hartnett believes the 100-day pattern will remain intact with the move from $34 trillion to $35 trillion.

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How the Federal Budget Deficit Doubled in a Single Year

It’s not totally unprecedented to see the federal budget deficit double from one year to the next, as it seems to have done this year.

But those occasions, at least in the past 50 years, have always corresponded with bad stuff happening to the national economy. Deficits surged in the late 1970s and early 1980s thanks to high inflation and a series of recessions. The budget deficit doubled between 2002 and 2003 thanks to a recession and as the War on Terror kicked off. And it skyrocketed again during the crises that bookended the 2010s: the mortgage crisis and the COVID-19 pandemic.

This year will likely be added to that list. The Congressional Budget Office last week projected that the federal government will post a deficit of $2 trillion when the current fiscal year ends on September 30.

At first blush, that might not appear to double last year’s budget deficit of about $1.4 trillion, but keep in mind that last year’s total included roughly $400 billion for President Joe Biden’s student loan forgiveness plan—funds that were never spent because the Supreme Court struck down the proposal, as the CBO notes.

Compared to those other historical examples, however, this year seems like an outlier. Unemployment is low, the economy has been growing steadily, and inflation has significantly abated. America does not seem to be in a crisis at the moment, but the government’s balance sheet certainly is.

And it is that way, in large part, because of the government’s own programs—as opposed to, say, an external event like a pandemic or a mortgage crisis. The drivers of this year’s rising deficit are four-fold, and three of them are the result of decades of poor policymaking: rising interest costs on the $33 trillion national debt, higher Social Security outlays, and more Medicare spending. As Axios points out, those three categories added more than $390 billion to the deficit relative to last year—a tremendous jump in a single year.

The fourth category is falling federal income tax revenue, which is responsible for about $171 billion of the added deficit this year versus last. That’s likely a blip and not a long-term problem—federal tax revenue was unexpectedly high a year ago, and bigger swings in annual revenue tallies seem to be becoming more common, as The Wall Street Journal explained in May.

That’s not the case for the other three categories driving this year’s deficit, all of which are going to keep getting worse for the foreseeable future.

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Surprised? Debt Ceiling Deal Puts No Limits on Ukraine Aid

The debt ceiling agreement reached between the White House and House Republicans places no constraints on spending on the war in Ukraine, a White House official told Bloomberg.

The $113 billion that has been authorized to spend on the war in Ukraine so far was passed as supplemental emergency funds, which is exempt from the spending caps that are part of the debt ceiling deal.

According to the Congressional Budget Office, funding “designated as an emergency requirement or for overseas contingency operations would not be constrained, and certain other funding would not be subject to the caps.” The deal suspends the nation’s debt limit through January 1, 2025.

Hawks in Congress are looking to use emergency spending to increase the $886 billion military budget that was agreed to as part of the deal. The emergency funds could go beyond Ukraine and might be used to send weapons to Taiwan or for other spending that hawks favor as part of their strategy against China.

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Three Lies They’re Telling You About The Debt Ceiling

Negotiations over increasing the federal debt ceiling continue in Washington. As has occurred several times over the past twenty years, Republicans and Democrats are presently using increases in the debt ceiling as a bargaining chip in negotiating how federal tax dollars will be spent.

Most of this is theater. We know how these negotiations always end: the debt ceiling is always increased, massive amounts of new federal debt are incurred, and federal spending continues its upward spiral. In fact, since the last time we endured a major debate over the debt ceiling—back in 2013—the national debt has nearly doubled, soaring from $16.7 trillion ten years ago to $32 trillion in 2023. Over that same period, federal spending has increased more than 80 percent from $3.4 trillion in fiscal year 2013 to $6.2 trillion in fiscal year 2022. 

So here we are again with policymakers essentially discussing how long it will take for the national debt and federal budget to double again. As far as Washington is concerned, that’s all fine. The debt ceiling will rise sizably. We know this because what really matters—as far as DC policymakers are concerned—is that the taxpayer gravy train never stops. Equally important is that the federal government not default on any of its massive debt to ensure continued access to cheap debt—and thus massive amounts of deficit spending—now and forever. 

To take this narrative at face value, however, we have to buy into some big myths that policymakers are quite enthusiastic about repeating.

These lies persist because the regime needs to convince the voters and the taxpayers that no matter what happens, no major changes to the tax-and-spend status quo can ever be allowed to occur.

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America’s Wars and the US Debt Crisis

In the year 2000, the U.S. government debt was $3.5 trillion, equal to 35% of the Gross Domestic Product (GDP). By 2022, the debt was $24 trillion, equal to 95% of GDP. The U.S. debt is soaring, hence America’s current debt crisis. Yet both Republicans and Democrats are missing the solution: stopping America’s wars of choice and slashing military outlays.

Suppose the government’s debt had remained at a modest 35% of GDP, as in 2000. Today’s debt would be $9 trillion, as opposed to $24 trillion. Why did the U.S. government incur the excess $15 trillion in debt?

The single biggest answer is the U.S. government’s addiction to war and military spending. According to the Watson Institute at Brown University, the cost of U.S. wars from fiscal year 2001 to fiscal year 2022 amounted to a whopping $8 trillion, more than half of the extra $15 trillion in debt. The other $7 trillion arose roughly equally from budget deficits caused by the 2008 financial crisis and the Covid-19 pandemic.

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Feds borrowed $4 billion per day in 2022, totaling $10K per household

Federal debt soared by $1.4 trillion in 2022 as President Joe Biden and Congress approved multiple new spending packages.

The Congressional Budget Office this month released the final details of federal spending in 2022 showing the federal government had a $1.4 trillion deficit last year, borrowing roughly $82 billion in December alone.

“This is not a pretty picture no matter how you look at it,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “There are times to borrow – like during a pandemic or major recession – and there are times where we should ratchet down the borrowing, like now when the economy is strong and inflation is hot.”

MacGuineas pointed out last year’s borrowing totals more than $10,000 per household and $4 billion per day.

The federal debt surpassed $31 trillion in the fall.

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Biden Plans To Cancel $10,000 In Student Debt Per Borrower Ahead Of Midterms 

As soon as this weekend, President Biden could announce a plan to cancel $10k in student debt per borrower, according to WaPo, citing three people with knowledge of the matter. 

Biden could make the announcement at the University of Delaware’s commencement ceremony on Saturday. The plan would apply to Americans who earned less than $150k in the previous year or less than 300k for married couples filing jointly. 

On April 6, the White House announced it would extend the pause of federal student loan repayments through August 31. It wasn’t clear if the administration would extend the moratorium beyond this. 

The decision to wipe out $10k of student debt per borrow who meets requirements comes as President Biden’s approval ratings collapse. 

Notice how the number of stories in the news of “student debt loan forgiveness” is soaring ahead of the midterms, but Biden’s polling numbers remain cratered. 

The Committee for a Responsible Federal Budget, a nonpartisan think tank, said canceling $10k of student debt per borrower would cost a whopping $230bln. 

WaPo said, “most of the nation’s 41 million student borrowers stand to benefit.” Though, who exactly benefits? 

Goldman Sachs’ Jan Hatzius found canceling the debt would mainly benefit middle- and upper-income households, contrary to the administration’s claims it would help the working poor. 

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US Borrowing Money From China to Fund Ukraine: Sen. Rand Paul

The United States can’t afford to send money to Ukraine without borrowing from China and taking on more debt to finance its obligations, said Sen. Rand Paul (R-Ky.) in a May 18 interview on the Breitbart News Daily Podcast.

On May 16, a bipartisan majority of U.S. senators voted to advance a $40 billion Ukraine aid package over an earlier objection from Paul. The Senate is on track for final consideration of the bill sometime later this week and is expected to pass the legislation.

“I think it’s important to know that we don’t have any money to send. I mean, we have to borrow the money from China to send it to Ukraine,” Paul explained. “And I think most people kind of get that, and many Republicans will say that and understand it when it’s a new social program, but if it’s military aid to a country, they’re like, ‘Well, we can borrow that. That’s a justified borrowing.’”

Currently, the U.S. national debt is inching toward $30.5 trillion, with annual federal spending outpacing annual federal revenue by over $2 trillion. To continue to fund obligations appropriated by Congress, the United States has to take on debt, much of which is purchased by Chinese buyers.

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